THE idea that money changes people for the worse is deeply ingrained in western culture. From A Christmas Carol, with its archetypal miser Scrooge, to Wall Street with its ruthless anti-hero Gordon Gekko, countless stories have featured individuals who forsake compassion as they amass their fortunes. More recently, the press has taken to vilifying bankers for awarding themselves huge bonuses while taking excessive risks with investments.

But what is the truth behind the clichés? Do riches really breed selfishness and greed at the expense of empathy and compassion? If so, why? Although researchers have explored many of the ramifications of class and wealth since the birth of social science in the late 19th century, only recently have they started to look in detail at the way money shapes our ability to relate to other people. The results are surprising, offering a picture of the impact of wealth on our psychology that goes far beyond the usual stereotypes. Understand these effects, and you get a better handle on the other inequalities marking the vast gulf in health and well-being that separates the rich and poor. It might even help explain our diverse reactions to the current economic crisis.

Dacher Keltner at the University of California, Berkeley, has pioneered much of the recent work. He first started to contemplate the link between wealth and empathy after being struck by what he calls “the profound self-interest and social disconnect” shown by Wall Street bankers, while at the same time recalling the generosity of his neighbours growing up …